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Inflated calculationsĪ few examples demonstrate how much this method inflates the calculation.
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G&Ts argue that they need long-term contracts to plan how much generation to build in the future, but a contract going out to 2050 is far longer than needed for an adequate planning horizon when it only takes a few years to construct a new power plant.Īdditionally, to calculate an exit charge in that way, the G&T has to project all the way to the end of the contract how much electricity will cost. Trying to predict prices of electricity that far into the future presents plenty of opportunity for manipulation because the price of electricity is subject to significant fluctuations.
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Then, when members do want to leave, the G&T argues that it has the sole discretion to set the methodology by which the member can leave, often reverting to claims that the G&T should receive all the revenues that it would have received over an entire contract. But this method for calculating an exit fee makes no sense and it certainly is not informed by the Voluntary and Open Membership principle. Exit complicationsīut at the same time, G&Ts have engaged in practices that make it very difficult for member cooperatives to withdraw, and they frequently ask for far more from the exiting members than is needed. Additionally, members are locked into long-term contracts that can last to 2050 and beyond, and often the G&T board has the sole power to approve a member exit. This is a two-way street - distribution cooperatives that withdraw from their G&Ts should hold the other members harmless. Indeed, the sixth Cooperative Principle is "Cooperation Among Cooperatives," and cooperation should include doing what is right for fellow members. Therefore, a withdrawing member should certainly pay its fair share.
#The wire little man code
Such policies that make it so difficult to leave do not meet the Voluntary and Open Membership principle - and they do not meet the code that cooperatives were founded upon. Right now, to survey a few of the battle fronts, Delta Montrose Electric Association is finalizing its exit from Tri-State in front of FERC after a three year protracted legal battle Tipmont Rural Electric Member Cooperative is 18 months into litigation with Wabash Valley Power Alliance at the Federal Energy Regulatory Commission to set a just and reasonable exit fee and La Plata Electric Association and United Power are fighting a multi-front war at the Colorado Public Utilities Commission and FERC to even know what their obligations would be if they exercised their right to exit. In recent years, several rural electric cooperatives have sought to withdraw from their G&Ts, but the G&Ts' captive practices and inflated buyout numbers make it very difficult, if not impossible, for members to ever leave without resorting to expensive lawyers and lengthy litigation. The answer, unfortunately, is "no." Looking only as far as the first Cooperative Principle - Voluntary and Open Membership - it is increasingly clear that some G&Ts have left that principle behind. We have encountered many rural electric cooperative members of generation and transmission cooperatives ("G&Ts") asking what Omar Little ponders throughout his turn on The Wire: Are G&Ts living by their own ideals set forth in the seven Cooperative Principles? The Wire and rural electric cooperatives are rarely mentioned in the same breath, but both prestige dystopian television show characters and cooperatives purport to live by a code. The Wire is a legendary television show unique because its main character is really the City of Baltimore. But among its greatest characters is Omar Little - a stickup man defined by his code. Indeed, he is known for his seminal statement, "a man got to have a code." Larson, both partners at Wilkinson Barker Knauer. The authors represent La Plata Electric Association in its ongoing exit litigation with Tri-State Generation and Transmission. The following is a contributed article by Raymond L.